With the recent marketing of clozapine for severely ill schizophrenic patients who fail to show an acceptable response to adequate courses of standard antipsychotic drug treatment, it is important to establish clozapine's role in the treatment of a wider population of schizophrenic patients who fail to achieve optimal benefit from currently available neuroleptic drugs, but who may not meet the criteria for severity and refractoriness utilized in the multicenter study on which clozapine's marketing was based. It is critical that the field have controlled efficacy data in this larger group of patients in order to help guide clinicians and policy makers as to the appropriate indications for clozapine use. The proposed study is a double-blind, clinical trial comparing to moderate doses of haloperidol in schizophrenic outpatients. This study will extend treatment to 24 weeks enabling a determination of whether or not longer treatment exposure increases the proportion of patients who improve and the amount of improvement. A 24-week trial also extends treatment into the risk period for agranulocytosis, allowing a clearer delineation of clozapine's risk-to-benefit ratio. Finally, the study incorporates measurement of specific cognitive deficits and social skills in order to assess outcome both in terms of reduction in psychopathology as well as changes in social skills and cognitive functioning. In addition, this strategy will enable us to determine the residual impairments in patients who have been treated with clozapine in order to facilitate the development of specific cognitive and psychosocial interventions tailored to the needs and abilities of this patient population. The same protocol will be followed at three sites (Hillside Hospital, UCLA-Brentwood and Western Psychiatric Institute and Clinic) in order to complete the study in a timely fashion and enhance generalizability to a wide range of patient populations.